Pressure mounts on the BoE to extend its Special Liquidity Scheme. The scheme under which banks can swap mortgage backed securities for Treasury bills for up to three years, is set to close on October 21 when its 6 months window ends. At Treasury Committee Hearing last week, BoE Governor King stressed that the scheme will be closed on the previously set date but that a proposal for a permanent liquidity insurance facility will be presented this week (possibly as early as today). Since then, however, HBOS shares have fallen sharply as market players view the bank and mortgage lender as more sensitive to money market disruptions as it relies more heavily than other British banks on whole sale funding. Voices are hence being raised for the BoE to extend its SLS. After Northern Rock and this weekend’s US events, many now wonder if HBOS will be the next bank to fail.